Reconfiguring Europe in a fractured global economy: The 2026 EMU Lab Florence Report

In a narrow macroeconomic sense, the euro has delivered a high degree of monetary stability over more than two decades, including through successive crises. The core vulnerability lies elsewhere: the euro remains insufficiently embedded in a corresponding political economy architecture. A monetary union normally rests on complementary regimes for fiscal capacity, capital markets, taxation, labour markets and crisis management. At the same time, the EU is entering an era of fragmented globalization in which currencies, payment infrastructures and value chains are increasingly weaponised. This contribution argues that these two challenges should be addressed together through a societal security agenda. Building strategic autonomy in defence, energy, digital infrastructure and critical value chains requires financing, risk-sharing and credible euro-denominated financial depth. A functional “upward spiral” can link security, competitiveness and the green transition provided that institutional coupling and democratic legitimacy are treated as first-order constraints.